Marking of Prescription Drug Does Not Create DJ Jurisdiction for Generic Competitor

Imaginative Research owns of several patents covering a prescription strength benzoyl peroxide wash. Medicis is the exclusive licensee and sells the product under the brand name TRIAZ. The patents are listed on the box.

Prasco makes a generic version (OSCION) and allegedly competes directly with TRIAZ.

Wanting to avoid the cloud of potential infringement, Prasco filed a declaratory judgment lawsuit against the patentee and licensee alleging non-infringement of the listed patents. The case was dismissed for lack of declaratory judgment jurisdiction, Prasco appealed.

Prasco admits that the DJ defendants did not know about the generic competition until it received the complaint. However, Prasco argued that Article III jurisdiction exists because the defendants (1) listed its patents on a directly competitive product and (2) Medicis had previously sued Prasco (for infringement of a different patent by a different product). The defendants also refused to sign a covenant not to sue.

Cases or Controversies: Article III of the Constitution limits the reach of federal judicial power to the adjudication of “cases” or “controversies.” This requirement has been interpreted to encompass only disputes that are “definite and concrete, touching the legal relations of parties having adverse legal interests,” “real and substantial,” and “admi[t] of specific relief through a decree of a conclusive character, as distinguished from an opinion advising what the law would be upon a hypothetical state of facts.”

In MedImmune, the Supreme Court rejected the CAFC’s original test for DJ Jurisdiction that required a “reasonable apprehension” of immanent litigation and replaced it with an amorphous requirement of a “substantial controversy . . . of sufficient immediacy.”

On appeal, the CAFC affirmed that Prasco’s controversy is not sufficient to be justiciable.

Although MedImmune clarified that an injury-in-fact sufficient to create an actual controversy can exist even when there is no apprehension of suit, it did not change the bedrock rule that a case or controversy must be based on a real and immediate injury or threat of future injury that is caused by the defendants—an objective standard that cannot be met by a purely subjective or speculative fear of future harm.

The court further held that DJ jurisdiction does not exist “without some affirmative act by the patentee.”

Regarding marking, the court found that the marking of “products with the applicable patents provides little, if any evidence that [the patentee] will ever enforce its patents.”

Hey guys, suppose a person (not me of course) wanted to make a loan to another person. Is there any type of paperwork that you can fill out to make it “officially binding” so that should you need to do anything in court later then you have a legal agreement worked out?

A generic does NOT have to infringe a patent covering the name brand product. Now, if the patent in question is directed solely to the active ingredient and/or the amount of active ingredient in the name brand product, then I don’t think a generic could not infringe such a patent. But, if the claims go beyond just the active ingredient/dosage it is very possible for a generic not to satisfy such claims.

Another possible downside to refiling is dismissal based on res judicata. I don’t know if a validity challenge is so closely related to a noninfringement assertion that the omission of the former in the earlier action would trigger res judicata, but I’d give that some careful thought and research before going back into court.

I think that’s a great question, Mr. Stern. It also seems to me that there should be DJ jurisdiction in that case, even absent a direct threat from the patentee. But this case appears to rely on a “caused by patentee” test to differentiate between “reasonable apprehension” and “speculative fear” of enforcement. I haven’t re-read Medimmune, but this seems to differ from what I recall. I thought the Supreme Court was focused more on an identifiable difference of opinion. In the hypothectical case raised in the footnote, one party presumably believes its patent is valid, the other claims otherwise. Sounds like an actual controversy to me.

Re the footnote at the end–“Prasco had sued only for a declaratory judgment of non-infringement. We thus have no opportunity to consider whether similar facts would be sufficient to establish jurisdiction if, instead, Prasco had conceded infringement and was only arguing invalidity.”
What possible downside would there be to Prasco’s refiling the complaint with the addition of stating that it infringes _if the patent is valid_? In order to market a generic, the generic company must convince FDA that it is offering the identical product. Therefore, Prasco must have already admitted infringement in its FDA filings. What’s it got to lose by reiterating that in the pleadings?

The Federal Circuit is simply being careful here in the DJ area, and are understandbly a bit “gun shy” of SCOTUS after MedImmune. At least the Federal Circuit hasn’t watered the DJ standard down to the patentee simply having a patent.

“Prasco had sued only for a declaratory judgment of non-infringement. We thus have no opportunity to consider whether similar facts would be sufficient to establish jurisdiction if, instead, Prasco had conceded infringement and was only arguing invalidity.”